As the financial year 2025–26 closes, taxpayers must complete critical compliance and planning tasks before 31 March 2026 to avoid penalties and optimize tax benefits. Key actions include filing the last opportunity Updated Return (ITR-U) for AY 2021–22, making eligible investments under Chapter VI-A for deductions, and ensuring accurate TDS on salary by submitting declarations to employers. Individuals and HUFs crossing turnover thresholds must prepare for TDS/TCS applicability from April 2026. Taxpayers should also file pending revised TDS returns, review AIS and Form 26AS for discrepancies, and clear any advance tax shortfalls to reduce interest liability. GST-related tasks include applying for LUT for exports, reconciling returns (GSTR-1, 3B, 2B), starting a new invoice series, and verifying stock and accounts. Overall, March is a crucial period for reconciliation, correction, and compliance, ensuring a smooth transition into the new tax year with minimal risk and maximum efficiency.
Arjuna (Fictional Character): Krishna, the financial year 2025-26 is ending and the new tax year 2026-27 will begin. As always, March is a month that brings both opportunity for every taxpayer with so many tasks to complete. How should a taxpayer prepare before March 31st, 2026?
Krishna (Fictional Character): Arjuna, you are absolutely right. The month of March is the most important month for all taxpayers. Since the Financial Year is coming to an end the taxpayer must review the books of accounts for the period April 2025 to March 2026.
Arjuna (Fictional Character): Krishna, which are the most important tasks that every taxpayer must complete before March 31st, 2026?
Krishna (Fictional Character): Arjuna, the important things every taxpayer must keep in mind before 31st March 2026 are as follows:
1. Updated Return (ITR-U) for AY 2021-22 – 31st March 2026 is the last date to file an Updated Return for AY 2021-22, i.e., FY 2020-21. If a taxpayer had omitted any income or made errors in the original or revised return for FY 2020-21, this is the final opportunity to correct.
2. Investment for Deductions Under Chapter VI-A – Taxpayers who have opted for the Old Tax Regime and wish to claim deductions under Section 80C, Section 80D and Section 80G must make such investments or donations before 31st March 2026.
3. TDS on Salary– Salaried employees must submit complete details of their investments, deductions and preferred tax regime to their employer before March end. This is important to ensure correct TDS is deducted in the month of March 2026.
4. Applicability of TDS and TCS for Individual and HUF- An Individual or HUF, whose total turnover exceeds ₹1 crore in the case of business or ₹50 lakh in the case of profession during FY 2025–26, shall be liable to deduct TDS and TCS, with effect from 1st April 2026.
5. TDS Revised Return – 31st March 2026 is the last date for taxpayers and deductors to file Revised TDS Returns for Financial Years 2018-19 (Q4) to 2023-24 (Q1 to Q3).
6. Review of AIS and Form 26AS – Every taxpayer must download and review their Annual Information Statement and Form 26AS. To check the TDS and TCS and verify against Books of Accounts. SFT transactions such as purchase or sale of mutual funds, immovable property, cash deposits in banks etc. should be checked for correct reflection in AIS.
7. Payment of Advance Tax– If any taxpayer has not yet paid the final instalment of Advance Tax (due on 15th March 2026) or has a shortfall, the same should be paid before 31st March 2026. Payment before 31st March reduces the interest liability under Section 234B and 234C.
8. Apply for Letter of Undertaking (LUT) for Tax Year 2026-27 – All exporters of goods or services and taxpayers making zero-rated supplies to Special Economic Zones (SEZ) without payment of IGST must apply for a fresh LUT for Tax Year 2026-27.
9. Reconciliation of Outward and Inward Tax Liability – Taxpayers must reconcile their outward tax liability as reported in GSTR-1 and GSTR-3B and ITC claimed in GSTR-3B with GSTR-2B with the Books of Accounts for the entire FY 2025-26.
10. New GST Invoice Series for Tax Year 2026-27 – Taxpayers must start a fresh invoice numbering series from 1st April 2026 for the Tax Year 2026-27.
11. Closing Stock Verification – All taxpayers must carry out a physical verification of stock as on 31st March 2026 and match it with the stock as per Books of Accounts.
12. Bank and Loan Account Reconciliation – All bank accounts, loan accounts and cash balances must be reconciled with the Books of Accounts before March 31st, 2026.
Arjuna (Fictional Character): Krishna, what is the key lesson that a taxpayer should take from all of this?
Krishna (Fictional Character): Arjuna, the month of March is not just the end of a financial year it is an opportunity to correct errors, claim rightful deductions, reconcile records, settle dues and start the new year fresh. Tax-saving is not just about investing at the last minute it is about reviewing, reconciling and completing every pending task with discipline and diligence.
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